Suntech Power Holdings Co., Ltd., the producer of solar panels, announced that it is in the process of acquiring 375MW of ingot and wafer slicing capacity in China.
The wafer manufacturing capacity is being spun off from a subsidiary of Glory Silicon Technology Investments (Hong Kong) Limited, in which Suntech holds an equity investment. Suntech will acquire the remaining 70% shares of the capacity for a total cash consideration of approximately $127 million, which is the total consideration after an offset of approximately $80 million of liabilities owed to Suntech. Post the acquisition, Suntech will own 100% of the 375MW of wafer manufacturing capacity in China. Suntech will take operational control in the fourth quarter of 2010 and it is expected to be immediately accretive to earnings.
Suntech Chairman and CEO Dr. Zhengrong Shi stated, "The acquisition of wafer manufacturing capacity is the next step of our vertical integration, which will enable Suntech to balance dual goals of large scale and low cost. The proximity of the manufacturing facility, operating experience of the management team and ample capacity make this an ideal acquisition for Suntech."
"Over the next 12 months, we intend to expand internal wafer capacity to 25% to 50% of our total cell and module capacity. This should enable us to significantly reduce wafer cost, and improve profitability," Dr. Shi continued. "Going forward, we also plan to leverage Suntech's global R&D resources to drive innovation and efficiency improvements in ingot and wafer manufacturing processes."